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COMMISSION ON AUDIT CIRCULAR NO.

97-002
February 10, 1997

TO

:
All Heads of Departments, Bureaus, Offices, Agencies and
Instrumentalities of the National Government, Heads of Local
Government Units, Managing Heads of Government-Owned Or
Controlled Corporations, including their Subsidiaries, COA Directors,
COA Auditors, and All Others Concerned.

SUBJECT :
Restatement with amendments of the rules and regulations on the
granting, utilization and liquidation of cash advances provided for
under COA Circular No. 90-331 dated May 3, 1990.

1.
RATIONALE
The resort to the cash advance system despite certain problems has been
recognized as a facilitative tool in the financial operations of the government.
There is therefore a need to continually update the pertinent regulations in order
to provide for a more efficient and effective control over the granting, utilization
and liquidation of cash advances.
2.
GENERAL PRINCIPLES
Ideally, cash should be handled under the general principles of the imprest
system, to wit:
1. Daily receipts on collections must be deposited intact with the proper
bank.
2. All payments must be made by check.
3. Only payments in small amounts may be made through the petty cash
fund. Replenishment of the petty cash fund shall be equal to the total
amount of expenditures made there from.

the regular cash advances. 3.2 Special cash advances are those granted on the explicit authority of the Head of the Agency only to duly designated disbursing officers or employees for other legally authorized purposes. including transportation fare.1. payments may be made by the disbursing officer in the form of cash through his cash advance. namely. 3. hotel room/lodging expenses and other expenses incurred by officials and employees in connection with official travel.2. there are certain instances when it may be very difficult.1 Regular cash advances are those granted to cashiers.In practice.1 Current operating expenditures of the agency field office or of the activity of the agency undertaken in the field when it is impractical to pay the same by check. such as . . DEFINITIONS AND SCOPE Cash Advance shall be of two types. paymasters.2 Commutable allowances 3.4 Petty operating expenses consisting of small payments for maintenance and operating expenses which cannot be paid conveniently by check or are required to be paid immediately.1. travel allowance. Wages and Allowances . disbursing officers.Maintenance and other operating expenses 3.3 Honoraria and other similar payments to officials and employees 3.1.1. 3. In such a case. impractical or impossible to make payments by check.Salaries. however.1 Salaries and Wages 3. as follows: 3.2. and/or property/supply officers for any of the following purposes: 3. and the special cash advances.2 Travel expenditures.

1.1 No Cash advance shall be given unless for a legally specific purpose.1.8 The Accountant shall obligate all cash advances granted.1 General Guidelines 4. 4.1.5 Only duly appointed or designated disbursing officers may perform disbursing functions.4 Only permanently appointed officials shall be designated as disbursing officers.1. GRANTING AND UTILIZATION OF CASH ADVANCES 4. Allowances. Wages. Under no circumstance shall it be used for encashment of checks or for liquidation of a previous cash advance.1. Honoraria and Other Similar Payments . Elected officials may be granted a cash advance only for their official traveling expenses.4. He shall see that cash advances for a particular year are not used to pay expenses of other years.1.6 Transfer of cash advance from one Accountable Officer (AO) to another shall not be allowed.2 Salaries. 4.2 No additional cash advances shall be allowed to any official or employee unless the previous cash advance given to him is first settled or a proper accounting thereof is made. 4.1. 4. 4.1. 4.7 The cash advance shall be used solely for the specific legal purpose for which it was granted. A cash advance shall be reported on as soon as the purpose for which it was given has been served. 4. 4. Officers and employees who are given cash advances for official travel need not be designated as Disbursing Officers.

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1 The Auditor shall periodically evaluate the accountability of the AO and recommend reduction of the cash advance if found excessive. chits or other forms of promissory notes and should not accept them as credit to the account. IOUs. "vales".5 The amount of bond necessary for the cash accountability of the AO shall be in accordance with the schedule of cash accountability and bond issued by the Bureau of the Treasury.2. 8. 9. 9.2. cash and cash items for examination. upon demand by the Auditor shall be prima facie evidence of misappropriation. to the . 9.2. Failure by the AO to have duly forthcoming any public funds with which he is chargeable.2 Cash Examination 9. 9. utilization and utilization of all cash advances in accordance with these rules and regulations.2. The granting of a grace period for the restitution is not allowed by law.2.4 The Auditor shall at once demand in writing the production of the missing funds at the moment the shortage or loss is discovered and established.3 The Auditor shall exclude from among the cash items presented any accommodation checks. RESPONSIBILITY OF THE AGENCY HEAD In shall be the responsibility of the Head of the Agency to ensure the proper granting.1 The Auditor shall conduct an examination of the accountability of each AO at least once every semester or as existing regulations of the COA require. together with all the working papers/ evidences disclosing the shortage.5 The Auditor shall submit the cash examination report.7.2 The Auditor shall demand the presentation by the AO of his cashbook. 9. 9. DUTIES AND RESPONSIBILITIES OF THE COA AUDITOR 9.

3 The AO shall likewise be held criminally liable.No cash advance shall be given unless for a legally authorized specific purpose. for failure to settle his accounts.3.2 State in the affidavit the violation of the provisions of Section 89 of PD 1445 and the penal provisions under Section 128 of the same law.1 Execute an affidavit stating the nature/purpose of the cash advance. or the explanation received is not satisfactory. and other information which may be pertinent to the case.1 and 3. the Auditor shall issue a letter demanding liquidation or explanation for non-liquidation.2 of COA Memorandum No. 9. 83-81B. Limitations on Cash Advance. 95112 dated December 26. both of which are herein quoted in full to wit: "Section 89.3.3. A cash advance shall be reported on and liquidated as soon as the purpose for which it was given has been served.2 If thirty (30) days have elapsed after the demand letter is served and no liquidation or explanation is received.1 Upon failure of the AO to liquidate his cash advance within two (2) months for AOs holding office within the station and three (3) months for AOs outside the station from date of grant of the cash advance. 9.3. the date the letter of demand was served on or received by AO. .3 During periods where no cash examination is conducted. COA Memorandum No. 90-660 and paragraphs 3. 9. 1995. 9. the Auditor shall advise the head of the agency to cause or order the withholding of the payment of any money due the AO.Provincial/City Auditor (if the offense is committed in an LGU) or to the COA Director concerned for the filing of criminal proceedings in accordance with COA Memorandum No.3. the fact that no liquidation or explanation has been submitted despite demand or if explanation has been submitted. No .3.3. the same is not satisfactory. 9. For this purpose the Auditor shall: 9. the amount not liquidated/accounted for.

if the offense is committed in the regions or to the COA Legal Office for the filing of criminal proceedings. Penal Provision. 1994. The rules and regulations on the granting. 94-013 dated December 13. REPEALING CLAUSE All Circulars. of COA Memorandum No.3. 9. 1995. (Sgd. Memoranda.1." (Underscoring ours). respectively. amended or modified accordingly.1 and 3.) CELSO D.3. xx of this code or any regulation issued by the Commission implementing these sections. utilization and liquidation of funds transferred from a Source Agency to an Implementing Agency are stated in COA Circular No. GAÑGAN Chairman .3 The affidavit shall be submitted to the COA Director concerned who shall refer the case to the appropriate Office of the Deputy Ombudsman.2. This Circular shall take effect five (5) days after its publication in the Official Gazette or newspaper of general circulation.Any violation of the provisions of Sections xx 89. regulations and other issuances inconsistent herewith are hereby repealed. or both such fine and imprisonment in the discretion of the court. 95-112 dated December 26." "Section 128. . shall be punished by a fine not exceeding one thousand pesos or by imprisonment not exceeding six (6) months. rules. 11. 10. in accordance with paragraphs 3.additional cash advance shall be allowed to any official or employee unless the previous cash advance given to him is first settled or a proper accounting thereof is made. COVERAGE This Circular shall cover only cash advances granted to officials and employees of an agency and shall not apply to funds transferred from a Source Agency to an Implementing Agency. if the offense is committed within the Metropolitan Manila Area.

) SOFRONIO B.) ROGELIO B.(Sgd. ESPIRITU Commissioner (Sgd. URSAL Commissioner .